Wall Street's Biggest Bull Turns Cautious Even As S&P 500 Tops 7,600: Yardeni Warns Oil, Fed And Mega IPOs Could Shake Up Record Rally

• Yardeni pointed to ongoing geopolitical tensions in the Middle East as a key risk, noting that the conflict remains unresolved.
• He also highlighted warnings from executives at Exxon Mobil and Chevron that global oil inventories are unusually tight.
• Yardeni is also concerned that the Federal Reserve could adopt a more hawkish stance than investors currently expect.

Ed Yardeni, president of Yardeni Research and one of Wall Street's most bullish strategists, is growing more cautious about the stock market's near-term outlook even as the S&P 500 climbed above 7,600 for the first time on Tuesday.

In a recent note, Yardeni said the rally is being driven by strong corporate earnings rather than speculative enthusiasm. While he maintained his year-end S&P 500 target of 8,250, Yardeni warned that several risks could increase market volatility in the coming weeks.

“A Fabulous Earnings Momentum (FEMO)-led stock market meltup should be more sustainable than a Fear Of Missing Out (FOMO)-led one. Nevertheless, we are turning cautious about the prospects for the stock market in the coming weeks,” Yardeni said.

What Is Troubling Yardeni?

Yardeni pointed to ongoing geopolitical tensions in the Middle East as a key risk, noting that the conflict remains unresolved. He also highlighted warnings from executives at Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) that global oil inventories are unusually tight, raising the possibility that crude prices could spike to $150 per barrel or higher if supply disruptions worsen.

Crude oil prices rose on Wednesday amid rising tensions in the Middle East. U.S. West Texas Intermediate (WTI) futures expiring in July gained 1.99% to hover around $95.63 a barrel. Brent crude futures expiring in August were up 1.8%, at $97.73 a barrel.

The United States Oil Fund ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) were up about 2% at the time of writing.

Yardeni is also concerned that the Federal Reserve could adopt a more hawkish stance than investors currently expect. The strategist suggested that policymakers could shift from an easing bias toward tightening, potentially setting the stage for a rate hike in July this year.

According to CME FedWatch data, the odds of the Fed keeping rates unchanged are higher than the odds of a cut or a hike until December 2026, when there is a chance of a 25-basis-point rate hike.

Yardeni Flags Wave Of Mega IPOs As Another Market Risk

Another potential source of volatility is the anticipated wave of large initial public offerings. Yardeni said several blockbuster listings in the coming weeks could temporarily disrupt market dynamics and increase swings in investor sentiment.

SpaceX is expected to begin its IPO roadshow this week, and the offering could open on June 12, 2026. It is expected to raise $75 billion through the IPO at a valuation of about $1.75 trillion.

AI startups Anthropic and OpenAI are two other large IPOs expected to hit the markets later this year.

However, Yardeni noted that some of these risks have yet to materialize. Oil prices remain near $100 per barrel, shipping activity through the Strait of Hormuz has partially resumed, and the Fed may still delay any policy tightening.

Meanwhile, U.S. equities declined in Wednesday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.23%; the Invesco QQQ Trust ETF (QQQ) edged lower by 0.04%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 0.38%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘bullish’ territory.

Also See: Tesla And SpaceX Merger By 2027? Here's Why Wedbush Believes Odds Have Jumped Above 80%

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